Wall Street expects short-term U.S. Treasury issuance to reach $1 trillion.

TechFlow reports on Sept. 20 that, according to the Financial Times, Wall Street banks expect the U.S. to borrow approximately $1 trillion over the next year through the issuance of short-term Treasury bills to meet growing government financing needs. Bank of America estimates that in the fiscal year ending September 2027, net new borrowing excluding proceeds used to refinance maturing debt will amount to approximately $1.07 trillion; JPMorgan Chase projects short-term Treasury bill issuances will reach approximately $1.09 trillion in 2027, while Goldman Sachs forecasts $961 billion. As short-term debt issuances increase, long-term borrowing costs in the U.S. have climbed to their highest level since 2007. Treasury Secretary Scott Bessent previously sought to lower long-end yields by expanding 10- to 30-year Treasury repurchase agreements.

Bank of America expects outstanding short-term Treasury bills to rise to approximately $8 trillion by September next year, accounting for 24.3% of tradable Treasuries; Goldman Sachs forecasts this ratio will stand at 24.3% next year and rise to 24.9% in 2028. This level approaches pandemic-era peaks, while the Treasury Borrowing Advisory Committee had previously recommended maintaining short-term debt at roughly 20% of total debt on a sustained basis. Analysts note that increasing short-term debt issuances helps lower current financing costs but also heightens future refinancing risks. Mark Cabana, head of U.S. interest rate strategy at Bank of America, stated that while the Treasury is balancing bond market supply and demand, a large-scale issuance of short-term debt could result in "larger and more volatile" interest expenses. Meanwhile, the Federal Reserve has already purchased substantial amounts of short-term Treasuries this year, and money market funds, with an asset base of approximately $8 trillion, also provide demand support for short-term debt. (Jinshi)